Sarah Wasserman (swasserman@sir-inc.com) Big box retailer Best Buy Co., Inc. (BBY) is scheduled to report its third-quarter earnings ahead of the open on Tuesday, Dec. 14. For the quarter, analysts are predicting the retailer to post a profit of 61 cents per share. Historically speaking, BBY has posted better-than-expected profits in three of the last four quarters.
Ahead of earnings, call players have ramped up their exposure to BBY. In the past two weeks, speculators on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have bought to open 2.9 calls for every put purchased, a ratio which ranks above 88% of all other readings taken during the past 12 months. In other words, traders on the ISE and CBOE have been initiating bullish bets on BBY at a faster-than-usual pace lately.
This trend continued on Friday, with 22,000 BBY calls changing hands -- more than double the equity's expected single-session call volume of just 8,521 contracts.
BBY's January 2011 42 call was quite popular on Friday, with 2,382 contracts exchanged -- the majority of which crossed at the ask price, suggesting that they were likely purchased. What's more, open interest increased significantly over the weekend, indicating that new bullish positions were added here. With BBY currently trading around $42.39, these 42-strike calls are right at the money.
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